CAIRO
— EGYPT reaped its richest reward yet from membership in the anti-Iraq coalition when Western creditor nations meeting in Paris agreed May 25 to write off half the $20.2 billion debt owed their governments. The creditors, already well disposed toward Cairo for President Hosni Mubarak's help in organizing Arab support for the United States-led coalition, said they were also impressed by economic reforms Egypt has promised as part of an International Monetary Fund (IMF) program.

"The Gulf crisis has given momentum to the economic reforms here," says a Western economic observer. "The favorable eye with which the international community is looking at debt relief is largely due to the position Egypt took during the crisis."

The recent announcement in Paris by the 17-nation Paris Club offered welcome respite to Egypt's hard-pressed economy. It provided some consolation, diplomats here say, for Egyptians' disappointment that the Gulf states are not showing their gratitude for military assistance during the war with floods of financial aid.

Egypt's creditors agreed to forgive 50 percent of its debt in phases, with 15 percent forgiven by July 1 and a further 15 percent by Jan. 1, 1993. On July 1, 1994, another 20 percent will be forgiven, and the remaining debt rescheduled, Paris officials said.

This will immediately save Cairo an estimated $300 million a year in debt repayments - and eventually much more. This is on top of the money Egypt has already saved by the US decision late last year to write off about $7 billion in military sales debt, and the decision by the Gulf states - Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar - to forgive nearly $7 billion of debt.

In all, Egypt's debt will be cut from just under $50 billion to roughly $25 billion. Egypt will still owe $10 billion in debt to foreign governments, and about $14 billion more to Western banks and other institutions and billions more to the Soviet Union and East European countries.

Although Egypt had long ago stopped paying interest on loans from Gulf states, let alone repaying capital, Washington's generosity "helped an awful lot in cash flow terms," says a European diplomat here. "Servicing the debt was becoming a real problem."

Egypt's Western creditors had postponed their decision until Cairo signed an agreement with the IMF, which was approved recently. In return for a series of reforms aimed at liberalizing the Egyptian economy, the IMF has offered a $372 million standby loan during the next 18 months.

The reforms are a mix of IMF recommendations, such as tax increases, reductions in subsidies, liberalization of the exchange rate, and steps toward converting to private ownership the state sector accounting for 70 percent of Egypt's production.

These are ambitious goals, officials say, in the light of Egypt's failure to stick to the terms of an agreement it signed with the IMF in 1987. In the back of many minds, too, are the bread riots that shook Cairo in 1977, sparked by a similar austerity budget.

Though personal incomes are expected to fall by as much as 15 percent in real terms during the next three years as a result of the austerity drive, "we see a very, very strong commitment to economic reform and to the IMF agreement," says a Western economic observer.

"Mubarak and his ministers have been very careful to tell people that this is going to be painful for a long time," he adds. "There's been a concerted effort to condition people."

To help cushion the blow, the World Bank is due to offer Egypt a $400 million loan to help finance a "Social Fund" to provide worker retraining, loans for small businesses, and public works projects to provide jobs.

But Cairo's hopes for broader redistribution of Arab wealth remain unfulfilled, and officials here say privately that Gulf countries have not kept all their promises of financial reward in return for military help in the crisis.

Although exact figures are not known, Saudi Arabia is believed to have given Egypt $1.5 billion dollars as a grant and a further $500 million in project aid, with the understanding more would follow from other Gulf sources.

Those funds have not followed, and the government "is envious now of [Syrian President Hafez al-Assad] who got his money up front" in return for sending troops to the Gulf, says a political analyst here.

Although the Gulf Cooperation Council countries have set up a $15 billion fund, for distribution over 10 years to poorer Arab countries, Cairo does not have high hopes of benefiting much, officials say. Egypt will have to share the aid with many other recipients, and it is due to be channeled to private enterprise rather than governments.

At the same time, Gulf money is not as plentiful as before, since Kuwait is devoting itself to rebuilding and Saudi Arabia counts the cost of its contribution against its costs in the war. Riyadh this month took out a $3.5 billion loan, its first in more than 15 years. "The timing is not right for Egypt to be pressing for more money," says a Western diplomat.

"The Gulf is not going to be charitable," says an Egyptian official. "Redistribution of wealth is a slogan. It doesn't happen overnight, and it doesn't happen just because poor countries want it to."